Volume 20, Edition 10

Happy Halloween everyone! This has been an interesting fall and we were happy to get to meet up with so many people at the MCIEF meeting in Orlando and the NTHECC in San Diego. Thank you all for your continued support and your great suggestions on ways to use CAB to enhance your business.

Just a reminder that the IMUA has a seminar this Thursday, November 2, 2017 on the Unique and Dangerous Trucking Exposures in “Commercial Auto Physical Damage, MTC Trailer Interchange, and Towing & Storage Expenses.” This is for claims and underwriting. You can attend remotely or on site in New York. Interested? Check it out here.

Thanks to a suggestion from Tim Kelly at Sentry Insurance Company (thanks Tim) we are going to start monitoring reported jury verdicts and settlements involving trucking companies. (nothing this month to report) If you are aware of the resolution of any litigation through trial or reported settlement please let us know. It is important for the industry to be aware of the judicial decisions but also the settlement numbers.

DOT REGULATION REVIEW – We can expect some changes in current proposed DOT regulations. As you recall all impending regulations were frozen after President Trump took office. The DOT has announced that it will start its review of all regulations. They will be evaluating regulations to determine if they are still necessary, are effective and whether they burden the development or use of energy resources. Regulations to be reviewed include the ELD mandate; NHTSA’s greenhouse gas Phase 2 regulation; the final rule on the drug and alcohol clearinghouse, and driver training regulations.

DOES THE PARKING SHORTAGE CAUSE CRASHES? – A recent study released by Oregon State University concludes that, at least in Oregon, the parking shortage may cause crashes and that reductions in speed can increase the problem. The study concluded that reducing average truck speed to 50 mph can lead to an 11 percent increase in the shortage at rest areas and a 14 percent increase at truck stops while reducing the average speed to 45 mph results in a 21 percent increase in parking shortages at rest areas and a 28 percent increase at truck stops. They analyzed the hot spot areas and found that most crashes are near a parking location. After 7 years of data collection on accidents in a certain venue the OSU College of Engineering found that at-fault truck crashes resulted in approximately $75 million of “crash harm.”

AUTONOMOUS VEHICLES – This seems to be one the hottest topics this year. The Senate Committee on Commerce, Science and Transportation has sent the AV START Act to the Senate floor to start moving toward regulation of this exciting new world. The Act exempts large commercial vehicles but it may not be far behind. In other news, the American Trucking Associations has unanimously approved its first-ever policy for the development of automated trucks. It is divided into 8 key points – Safety, Flow of Interstate Commerce, Federal Preemption and State’s Rights, Uniform State Laws, Infrastructure and Connectivity, Public Education and Maintainability.

Key points outlined in the new policy include:

* The trucking industry, led by ATA, should invest in coalition building with government, academia, research institutions, and private sector to demonstrate the rising level of safety related to automated and connected vehicle technology.

* Demonstrations of automated trucks are needed to provide data to establish safety and other benefits of this technology. Initial data generated by technology developers, based on their safety and validation testing, will be valuable.

* Government regulators and lawmakers should revise or remove outdated safety-related laws, regulations, and guidance as data demonstrates a technology’s ability to provide an equivalent or higher level of safety than current regulations support or incorporate.

* As automated truck technology is developed, tested, and commercialized, it is critical that federal, state and local laws do not create disparities that limit commerce and obstruct the successful adoption of these potentially safety- and productivity-boosting technologies.

* Conflicting or duplicative requirements among Federal and State agencies will create roadblocks to deployment of automated technology, delaying the safety benefits, fuel savings, emissions reductions, and potential efficiency improvements to our country’s transportation system. When conflicts arise between federal and state regulations, the federal government must take a clear leadership role and, if necessary, exercise federal preemption.

* States should commit to ensuring a unified national framework to facilitate the development, testing, and deployment of commercialized automated and connected truck technology, including further harmonization of state-level traffic and vehicle rules affecting the operation of such technology.

* Federal and State laws and regulations should neither require, nor limit differing levels of automation. The trucking industry, when given a choice, will deploy technologies that are best suited for individual business needs. Carriers will increasingly adopt proven levels of automation in the interest of safety and productivity.

* Investments in infrastructure such as repairing, maintaining, and improving pavement, lane markings, and signs, as well as intelligent transportation systems (ITS) technology, will benefit both automated and conventional vehicles.

TRAFFIC FATALITIES – The NHTSA released the report of official traffic fatalities for 2016. A total of 37,461 people were fatally injured in 2016, an increase of 5.6%. Vehicle miles traveled increased by 2.2 percent to 3.16 trillion miles. There were 1.18 deaths per 100 vehicle miles. Distracted driving and sleepy driving fatalities dropped. Unbelted deaths increased by 4.6 percent, speeding-related deaths up by 4 percent, and drunk driving fatalities increased by 1.7 percent. There were 4,317 fatalities in crashes involving large trucks, 5.4 percent more fatalities than in 2015, the highest since 2007. However, large truck crash deaths accounted for less than 12 percent of all traffic fatalities. You can download the overview of the report here.

TOP TRUCKING CONCERNS – The ATRI annual report on the top concerns in the trucking industry was released this month. The report is based upon 1,600 survey responses. The following is ATRI’s top 10 list for 2017:

OPERATIONAL COSTS OF TRUCKING – The ATRI also released its annual report on the operation costs associated with operating a trucking company. The average cost per mile is $1.59 per mile. There was a decline in fuel costs but an increase in driver wages and benefits. Insurance premiums increased 1% to 7.5 cents per mile. But specialized carriers were higher, as much as 9 cents a mile. Carriers operating fewer than 100 power units reported the highest insurance CPM, while the largest fleet operators reported substantially lower costs of 4.4 cents per mile.

CASES:

AUTO:

The District Court in Colorado refused to remand a coverage dispute to state court. In an interesting turn of events the Court held that when the coverage action turned on the applicability of the MCS-90, even where there was no judgment against the motor carrier, the Court would have jurisdiction under federal law. Even without federal question jurisdiction, the Court indicated that it would keep the case because adding the motor carrier to the suit, which would defeat diversity, was unnecessary. (Pacheco v. Sparta Insurance Co., 2017 WL 4296661)

The Western District of Pennsylvania granted summary judgment to one insurer it a coverage action against a second insurer. The Court concluded that the defendant had a duty to defend a motor carrier in a personal injury action and that it breached its duty to the motor carrier. The court ruled that the defendant owed contribution to the insurer who had provided the defense. The Court held that it was possible under the allegations contained in the Amended Complaint that a trucker had “borrow[ed]” a vehicle so as to trigger coverage under the terms of the Truckers Endorsement provision of the Policy. (Great West Casualty Company v. Selective Insurance Company, 2017 WL 4386817)

When the complaint does not allege a demand for a specific sum of money, and the case is removed to federal court, the defendant bears the burden of establishing that the jurisdictional minimum of $75,000 was met. The Southern District in Alabama held that the defendant, who was involved in a two-truck accident, had not established that the damages claimed by plaintiff were under limit and, on its own motion, sent the case back to the state court. (Thompson v. Ortensie, U.S. Dist. Lexis 174959)

A motor carrier who had sold a vehicle to another motor carrier, which was still being paid off and remained titled to the seller, was not liable for a truck accident involving the buyer. The Western District of Louisiana confirmed that the conditional nature of the sale did not render the plaintiff liable for the actions of the buyer absent evidence that it was operating the vehicle. (Young v. Waller, 2017 U.S. Dist. LEXIS 173392)

What are the minimum limits of insurance required when the shipment is intrastate non-hazardous but the carrier also has interstate authority? The Middle District of Florida held that an insurer was entitled to assert the application of a non-reported driver endorsement which limited coverage to the statutory minimum. In this case the applicable minimum was the state limit of $300,000 and not the interstate limit of $750,000. (National Independent Truckers Insurance Co. v. Mathieu, 2017 WL 4785455)

CARGO:

Procedures are important. When all of the parties in an action for a large cargo loss, pending in the District Court in Nebraska, filed summary judgment motions, the Court noted that the motions were filed before an amended complaint was filed and joined. The Court concluded that all of the motions were moot as they addressed a pleading, the original complaint, which was mooted by the amended complaint. Looks like everyone has to start anew and costs will continue to accrue. (Certain Underwriters v Southern Pride, 2017 WL 4325726)

A provision in an ocean bill of lading which exonerated the steamship line for any damage when a container temperature malfunctioned when it was not in its possession (i.e while it was being trucked to final destination) was held valid in the Southern District of New York. (Lamex Agrifoods, Inc. v. MSC Mediterranean Shipping, 2017 U.S. Dist. Lexis 175211)

Two months in a row for contingent cargo cases! This time the Northern District of Illinois upheld the sub-limit under a contingent cargo policy for imposter thefts. The insured had argued that an endorsement which provided additional limits for a specific shipper trumped the sub-limit and the Court disagreed. The Court did allow the suit to continue against the insurance agent for alleged negligent misrepresentation as to the extent of the coverage afforded by the endorsement. (J&A Freight Systems v. Travelers Property & Casualty Co., 2017 U.S. Dist. LEXIS 158354)

Rejecting a shipment without a full analysis of the damages was a problem for one plaintiff in the Northern District of Illinois. While the motor carrier was not permitted to rely on a ‘no touch policy’ to defeat all liability, the Court held that the plaintiff could not sustain its burden of proof as to the entire load when the evidence only showed that 5 pieces were damaged. The Court also held that the plaintiff was only entitled to recover the cost of the five damaged pieces. (Carrier Services Group v Schneider Logistics, 2017 WL 4271872)

The Southern District of New York denied both parties’ motions for summary judgment in a temperature abuse cargo case. Strawberries were rejected at destination and the motor carrier claimed there was no reefer problem. The Court held that there were questions of fact as to the conditions of the strawberries at origin and whether the shipper took certain acts which resulted in the impact to the strawberries in transit. The case was sent to trial. (Capital Logistics v. Gray Transportation, 2017 U.S. Dist. Lexis 174805)

The validity of a broker’s claim against a motor carrier was once again addressed in the Middle District of Tennessee. The Court held that the broker could sue the motor carrier, provided the broker had paid the claim and had an assignment from the customer. The Court further held that the downstream carrier was not subject to jurisdiction in Tennessee simply because it had the DOT required BOC-3 designated agent for service of process. Finally the Court dismissed all of the insurer defendants as there was no recognized direct action on a liability policy in Tennessee without a judgement against the insured. (Western Express v. Villaneuva, 2017 WL 4785831)

But over in the Eastern District in Missouri the Court remanded a case brought by a broker, which was removed by a motor carrier under the Carmack Amendment. The Court held that the indemnity claim under the broker carrier contract was not subject to Carmack and concluded that it was a state law breach of contract claim and that no assignment by the cargo owner was needed. The case was sent back to state court. (Mid-America Freight Logistics v. Walters Trucking, 2017 WL 4778570)

In another removal action, the District Court in Minnesota held that the motor carrier could not prove the $10,000 damage requirement for removal of a Carmack claim by including potential damages in addition to the damages pled by the plaintiff. Back the case went to state court. (Kaiser v. Fed Ex Cargo, 2017 U.S. Dist. LEXIS 166692)

A co-defendant filed a cross-claim against an interstate carrier under a theory of negligence. The Eastern District in North Carolina concluded that because the codefendant was not the shipper or named on the bill of lading it was not subject to the Carmack Amendment preemption and denied a motion to dismiss. (PCX Holding v. Guy M. Turner, 2017 WL 4707017)

WORKER’S COMPENSATION:

The Court of Appeals in Michigan addressed the priority of coverage under Michigan law. The plaintiff was an owner operator operating under agreement with a motor carrier. The Court held as the vehicle was under lease for more than 30 days the motor carrier’s insurer had the highest priority for PIP coverage. (Marokay v. Total Heath Rehab., 2017 WL 4700030)